Sugarcane-based ethanol ban to affect Punjab farmers, sugar mills and groundwater: Shiromani Punjab Forum
Babushahi Bureau
Chandigarh, October 21, 2026: The Centre’s decision to exclude sugarcane-based ethanol from the E20 petrol-blending programme for 2026–27 could affect Punjab’s farmers, cooperative sugar mills, poultry and dairy sectors, and groundwater resources, the Shiromani Punjab Forum said on Wednesday.
The independent think-tank released an 11-page discussion paper, Sweet Are the Uses of Adversity — and Diversity, authored by its Founder and Convener KBS Sidhu, a former Special Chief Secretary, Punjab. The Forum has invited stakeholders to submit their views on the proposals outlined in the paper.
The Centre’s decision bars sugarcane juice, sugar syrup and B-heavy molasses from ethanol purchased by public-sector oil marketing companies for blending with petrol under the 20 per cent ethanol-blending programme. The restriction does not cover alcohol used in liquor production, which is regulated by state governments.
According to the Forum, the policy could delay payments to sugarcane growers and affect cooperative sugar mills that have invested in distilleries. It could also intensify competition for maize between ethanol producers and Punjab’s poultry, dairy and starch industries, potentially increasing costs for these sectors.
The discussion paper also raises concerns over the water footprint of different ethanol feedstocks. Citing official figures, it estimates that producing a litre of ethanol from rice involves around 10,790 litres of water, compared with 4,670 litres for maize and 3,630 litres for sugarcane.
The paper further points to the tendering of 3.25 billion litres of ethanol from Food Corporation of India (FCI) rice for the current year. It notes that the rice is sold to distilleries at Rs 2,390 per quintal, the price applicable to welfare schemes, against an FCI economic cost of around Rs 4,100 per quintal.
“Punjab ends up paying for the fuel tank three times: in groundwater pumped for paddy, in the free power that pumps it, and in the gap between FCI’s cost and its sale price,” Sidhu said.
He said the current situation could also create an opportunity to promote crop diversification in Punjab by encouraging kharif maize cultivation instead of water-intensive spring maize.
The paper argues against a permanent ban on sugarcane-based ethanol and proposes a publicly disclosed mechanism to link sugar diversion for ethanol production with closing sugar stocks.
Its seven recommendations include feedstock pricing linked to water use; a Punjab kharif maize compact with assured procurement and grain dryers at mandis; and a defined sowing window for spring and summer maize in red-zone blocks.
Other proposals include excluding genetically modified corn from the E20 supply chain, conducting a national water audit of the ethanol programme, keeping the B-heavy molasses route open for Punjab’s cooperative sugar mills, and strengthening regulations governing distillery locations and discharge.
Calling the document a discussion paper rather than a final position, Sidhu said the Forum wanted farmers, sugar mills, distillers, representatives of the poultry and dairy sectors, agricultural scientists, government officials and political parties to examine the proposals and offer suggestions.
The Forum has invited comments within 30 days at kbs.sidhu@gmail.com, with the subject line “SPF Discussion Paper — Ethanol”.